Change could be coming for colleges and universities in the U.S. – and it’s not chump change.
The U.S. House of Representatives is set to vote today on an economic stimulus package that calls for $550 billion in domestic spending and $275 billion in tax cuts.
The $550 billion would be distributed among a number of domestic programs, with $142 billion targeted for education. Those in the education sector see great potential in the proposed bill.
“UC is pleased with how the package is shaping up,” said University of California communications director Chris Harrington. “It will definitely take the strain off of working families and students. Research institutes are clearly a national concern. UC can help by pursing research to stimulate the economy.“
In the House version of the bill, $30 billion would go to financial support for students: $15.6 billion to the Pell Grant, $490 million for work study funds, and $12.5 billion for tax credit for low-income families. The Senate’s current version of the plan gives less money to education.
According to Jean Ross of the California Budget Project, $11 billion would go to California to free up money for the state budget, set off budget cuts, education technology, special education, construction, job training and other areas.
Although some are praising the stimulus package for its potential to infuse the economy, others are concerned that it is not the right maneuver.
“Infrastructure spending is not the answer now,” said economist John Huizinga of the University of Chicago during the Myron Scholes Global Markets Forum on Jan. 16. “Putting more construction workers back to work will just be a repeat of the residential housing boom. These people will be out of jobs again when the construction is over. It’s not sustainable, and we need to allocate funds in a way that’s really productive.“
Although Huizinga doesn’t think a fiscal stimulus is appropriate, others see it as inevitable and much needed.
“No one has enough horse power to derail the bill,” said Mark Watts of California Strategies, a public affairs consulting firm. “It’s a necessary hallmark that will result in a good product.“
Others think that the focus of the bill should be more focused on tax cuts than about spending on other programs and funding. They cite the fact that later when government spending is cut, or when taxes are raised, output will come back down. Republican leaders are also urging other House Republicans to vote against the bill.
“This plan is timely and targeted, but it’s only temporary. We’re not avoiding recessions, we’re just reallocating them across time,” Huizinga said. “National savings will fall. Less investment and more account deficits will also result. The government needs to plan slowly.“
Even though some disagree with the package, there is still a sense that the plan will make a difference in some way.
“The Obama stimulus will not help the real economy turn positive faster,” said University of Chicago economist Robert Lucas at the conference. “I could well be wrong if it has a big psychological effect – a reversal in investor confidence and consumer confidence.“
Others believe that there is a deeper-rooted problem with the economy.
“There are inherent problems in the financial sector,” said UC Davis professor Kevin Salyer, who specializes in monetary economics. “At this stage the economy could go bad quickly, but there needs to more research about the economy done. The financial system needs to be put back into order.“
With the recession having lasted since the end of 2007, some see the need for the package as absolutely necessary for the time.
“The only danger for the administration and Congress right now is to do too little,” said a senior Senate staffer. “The economic problems our country is facing have been building for years and they are tremendous. We don’t want to be in a situation where we once again have done too little, too late.“
The House is set to vote on its version of the bill today. Lawmakers hope to get the bill signed by the president by President’s Day, Feb. 16.
ANGELA SWARTZ can be reached email@example.com.
$39 billion to restore state education programs
$30 billion to financial aid for students
$8 billion to scientific researchers
$8.7 billion for infrastructure support for colleges and universities
$4 billion to grants for adult education and training.